NMDC shares clock 52-week high after operationally strong Q3 show; what should investors do?

State-run iron ore producer National Mineral Development Corporation's shares soared to a 52-week high on Thursday after the iron ore producer staged a strong operational performance for the October-December period. NMDC shares rose by as much as Rs 17.2, or 7.3 per cent, in early deals to touch Rs 252.7 apiece on BSE, surpassing an existing 52-week high scaled last week. 

The stock finished the day 4.9 per cent stronger at Rs 247 apiece.

After market hours on Wednesday, NMDC reported a 67.7 per cent year-on-year jump in net profit with 45.4 per cent growth in revenue, both better than analysts' expectations. The company's standalone net profit stood at Rs 1,492.7 crore and revenue at Rs 5,409.9 crore for the fiscal third quarter. 

According to Zee Business research, NMDC's third-quarter standalone net profit was estimated at Rs 1,380 crore and revenue at Rs 5,142 crore.

The PSU's margin, a key measure of profitability, improved by 680 basis points on a year-on-year basis to 37.5 per cent. 

NMDC dividend

The NMDC board declared an interim dividend of Rs  5.75 per share with a record date of February 27.  

How market wizard Anil Singhvi views NMDC Q3 earnings

Zee Business Managing Editor Anil Singhvi highlighted that NMDC's quarterly results were strong, especially on the operational front, but also pointed out that the stock has already gained about 35 per cent in three months. 

The market guru said one can expect support for NMDC futures near the Rs 225 mark, and higher levels at Rs 243 and Rs 248. 

What analysts say about NMDC

Zee Business analyst Ashish Chaturvedi recommends buying NMDC shares at current levels for a three-month target of Rs 260 apiece. 

Chaturvedi's target implies an upside to the tune of 10.4 per cent in the stock from the previous close. 

"NMDC, the largest producer of iron ore in India with a combined yearly production capacity of 50 million metric tonnes, is much ahead of its peers due to economies of scale and significant capital expenditures made in the past for the transportation of iron ore, which gives it an edge over its rivals and increases profit margins,"  Rajesh Sinha, Senior Research Analyst at Bonanza Portfolio, told Zeebiz.com. 

"Because of the infrastructure it has built and its enhanced operating efficiency through technological progress and better transportation, NMDC is able to offer iron ore at a lower cost than its competitors," Sinha added. 

NMDC shares: Past performance

As of February 13, NMDC shares have rewarded investors with a return of 96 per cent in the past year, outperforming a rise of 21 per cent in the headline Nifty50 index.

The NMDC stock rose 41.6 per cent in the third quarter of the current financial year while the benchmark index rose 10.7 per cent.

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